The real cost of housing

Published
4:00 am PDT, Friday, June 25, 2004

THERE'S A boundless fascination with the cost of housing in the Bay Area, where readers are treated to monthly reports of home prices soaring through the stratosphere. In May, the median price of a single-family home hit a record $530,000, amid speculation that the boom can't go on forever. Right?

Yet often lost amid the frenzy is the reality faced by working families, small businesses and even sizable corporations contemplating a move to the Bay Area. How can employees expect to afford a home in the country's most expensive housing market -- let alone all the service employees and higher- paid professionals who tend to the region's disparate industries?

A spate of recent reports have provided evidence to the anecdotal woes expressed by thousands of Bay Area residents. New housing levels fell in 45 Bay Area communities and the lack of supply has driven up prices while city officials have tried to push policy mandates for affordable housing. Yet the approach has only exacerbated the problem with developers shying from conditions to build less expensive units. Planners say San Francisco is building only 1,000 units annually when it needs close to 3,000 just to keep up with the demand.

It's a downward spiral for a region that proudly touts its diversity, because only longtime homeowners or affluent house shoppers can afford to purchase a home here. Things will stay that way unless officials can begin to find ways to remove policies that keep new units in low supply, and make lower- priced units nearly non-existent.

The Bay Area needs all types of housing, not just $1 million cottages in Palo Alto or $500,000 fixer-uppers in San Francisco's fog belt. The housing crisis requires serious regional planning -- something else that has long been in short supply.